Chapter 9
Identifying Market
Segments and Selecting
Target Markets
PowerPoint by Karen E. James
Louisiana State University - Shreveport
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 0 in Chapter 9
Objectives
 Learn how companies identify the
segments that make up a market.
 Understand the criteria companies
use to choose the most attractive
market segments.
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 1 in Chapter 9
Target Marketing
 Target marketing requires marketers to
take three major steps:
– Market segmentation: Identifying and profiling
distinct groups of buyers who differ in their
needs and preferences.
– Market targeting: Selecting one or more market
segments to enter.
– Market positioning: Establishing and
communicating the key distinctive benefit(s) of
the company’s market offering to each target.
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 2 in Chapter 9
Using Market Segmentation
 Mass marketing is losing popularity
 Micromarketing can be undertaken at
four levels:
– Segment marketing
– Niche marketing
– Local marketing
– Individual marketing
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 3 in Chapter 9
Using Market Segmentation
 Three patterns of preference
segments are typically identified:
– Homogeneous preferences
– Diffused preferences
– Clustered preferences
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 4 in Chapter 9
Using Market Segmentation
Needs-based Segmentation Process
 Needs-based
segmentation
 Segment
profitability
 Segment
identification
 Segment
positioning
 Segment
attractiveness
 Segment
“acid test”
 Marketing-mix strategy
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 5 in Chapter 9
Using Market Segmentation
 Useful market segments share
certain characteristics:
– Measurable
– Substantial
– Accessible
– Differentiable
– Actionable
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 6 in Chapter 9
Segmenting Consumer Markets
Bases for
Segmentation
 Nation or
country
 State or region
 Geographic
 Demographic
 City or metro
size
 Psychographic
 Density
 Behavioral
 Climate
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 7 in Chapter 9
Segmenting Consumer Markets
Bases for
Segmentation
 Age, race, gender
 Income, education
 Family size
 Geographic
 Family life cycle
 Demographic
 Occupation
 Psychographic
 Behavioral
©2003 Prentice Hall, Inc.
 Religion, nationality
 Generation
 Social class
To accompany A Framework for Marketing Management, 2nd Edition
Slide 8 in Chapter 9
Segmenting Consumer Markets
Bases for
Segmentation
 Geographic
 Lifestyle
– Activities
– Interests
– Opinions
 Demographic
 Personality
 Psychographic
 Core values
 Behavioral
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 9 in Chapter 9
Segmenting Consumer Markets
Bases for
Segmentation
 Geographic
 Demographic
 Occasions
 Benefits
 User status
 Usage rate
 Loyalty status
 Psychographic
 Buyer-readiness
 Behavioral
 Attitude
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 10 in Chapter 9
Segmenting Consumer Markets
 Multi-attribute segmentation via
geoclustering combines multiple
variables to identify smaller, betterdefined target groups
– PRIZM Geoclustering system uses
demographic, geographic, lifestyle, and
behavioral characteristics
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 11 in Chapter 9
Segmenting Business Markets
Bases for Segmentation
 Operating
variables
 Situational
factors
 Purchasing
approaches
 Personal
characteristics
 Demographic variables
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 12 in Chapter 9
Segmenting Business Markets
 Rackman and Vincentis proposed a
segmentation scheme that classifies
business buyers into three groups:
– Price-oriented customers: best served
via transactional selling
– Solution-oriented customers: best
served by means of consultative selling
– Strategic-value customers: best served
by means of enterprise selling
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 13 in Chapter 9
Market Targeting Strategies
 Evaluating and selecting market
segments requires assessing the
segment’s overall attractiveness in
light of company’s objectives and
resources.
 Five patterns of target market
selection can then be considered.
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 14 in Chapter 9
Market Targeting Strategies
Patterns of Target Market Selection
 Single-segment
concentration
 Product
specialization
 Selective
specialization
 Market
specialization
Full market coverage
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 15 in Chapter 9
Market Targeting Strategies
 Targeting multiple segments may
result in cost economies
 Supersegment targeting may be
appropriate
 Blocked markets often require
megamarketing countermeasures
 Be aware of ethical concerns
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 16 in Chapter 9
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Identifying Market Segments and Selecting Target Markets